What is a Payable on Death Account?

One of the simplest of estate planning tools is the payable on death account. You just need to complete some basic paperwork at your bank to name a beneficiary who will assume ownership of the account upon your death.

A payable on death account remains fully in your control while you are living. You can withdraw any amount, up to and including closing the account. The beneficiary that you choose can only access the account after you have passed away and a death certificate has been presented.

While payable on death accounts are indeed simple, they are too simple for the needs of most individuals. Depending on the rules of the financial institution in question you may or may not be able to add multiple beneficiaries. If you can add multiple beneficiaries you may be required to allow each beneficiary to receive an equal portion of the remainder left in the account after you die.

The above may not be consistent with your actual wishes.

People who are interested in asset protection should look elsewhere because payable on death accounts will do nothing to provide protection from creditors or claimants. These accounts will also do nothing to provide estate tax efficiency.

There are no true easy answers when it comes to estate planning. The only foolproof way to proceed is to discuss your unique family situation and your legacy goals with a licensed Vermont estate planning attorney.

Stephen A. Unsworth is admitted to practice in both Vermont and Maine, and has more than 30 years of experience in estate planning and business law. His mission is to provide quality estate planning services, including assistance with Living Trusts, Wills, Medicaid Planning, Probate, Trust Administration, Powers of Attorney, Special Needs Planning, and Family Limited Partnerships.

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